Sendas Distribuidora S.A. ($ASAI3)

[Foreign Language] We'd like to instruct you at all questions. [Foreign Language]

Leverage of 2.5x growth at the same period of the previous year. And now the main focus is the resilience of this business model, where despite a period with more challenging sales different reasons, [indiscernible], the company was able to discipline in gross margin and expenses was very strong and strong cash generation in the period as well. So we had BRL 2.9 billion operational cash generation and then after that's added on to the debt for the normalization of [indiscernible] regards to CapEx for investments, you had BRL 700 million in investments and this is an important alignment in regards to the company's strategy for delivering and so a lower amount of stores and level of investments and that generated a cash generation that was [indiscernible] the effect of the anticipation of cars in comparable basis, we generate BRL 1.2 billion net cash and that is converted automatically to debt payments. So when we talk about our net debt, we go from BRL 13.4 billion to BRL 12.2 million that met dropping in that period, we dropped to BRL 1.2 million. And in regards to the leverage on the right side, we have this trend of the drop in the debt and an important mention also on the right side of the chart here of the covenants, the company has covenantal hired. [indiscernible] times have begun and these consider the post IFRS EBITDA. So the converts covenant to the IFRS EBITDA. It is equivalent to 1.28. So that would be current status. So less than half of the risk of covenants reinforcing a level of security and financial comfort that the company has in regards to these debts. And finally, on our cash. On the next slide, we finished the period with BRL 4.4 billion and that's our available cash. And along with this, we also have the nondiscounting cards, would you add up to total possible cash of BRL 7.5 billion in the end of the first quarter, and the company is really confident about cash generation. And due to this or we also launched a buyback program for debenture, which is event to BRL 20 million in a period of 180 days. When this program intends to reduce their gross debt in the company and take advantage of possible opportunities for arbitration are these fees and rates considering possible secondary multis in the venture and these are financial highlights of the first quarter of 2026. Now I pass the floor on Belmiro talk about our initiatives to evolve the business.

Well, within a as mentioned initially, of course, regardless of the external market, we've been going through these different cycles. Now we know about the commodity cycles, the high interest rates, low interest rates the company has been searching for ways to be positioned. And we have other opportunities even to talk about this and take advantage of an asset that is most important, which are the 40 million monthly customers so that we can all have these new initiatives focused on low CapEx venture flow and store structure to add on new sales. And so we have 100 stores with the products we consider in and out. And our objective is to have products that have quick turnover to competitive prices and they can most for a certain period of time, right? So we're seeing like the refrigerating that were placed in the stores and other products that we're going to work like this. We're not going to sell like a big line of refiguring is this just an opportunity either on looking at our flow of customers and that reinforced this perception of loan values and increase the share of volume and other part is titin the legal framework that will allow us to deploy the full drug store in our stores. And we were able to do this before in our galleries, but the first the layout of the cash and carry to start working on the users outside and we saw some changes in habits that analog drugs, and we've been switching for greater healthy lifestyles. We had other opportunities also for cars, protein and supplements. And in our view, the drug store, looking at the public the existing code and our structure will allow us to also be competitive and to enter in this new sector enable actors to sell to get new sales but also a recovery piece of what we call HPC, which is hygiene and personal care products. And besides being an important net sales later was also I think to the products I already mentioned, like supplements and other complements that we're already advancing with. So our drugstore project with a shift in the legal framework was a demand from the sector for almost 30 years in Brazil, our expectation in the second half of the year, we already have 25 stores with this drug are implemented. Already included some new products as well that are geared to supplements, vitamins proteins, et cetera, to adjust to consumer habits and of course, supplements and vitamins and everything where I understand there is a big potential to sell more in Brazil, we expect for extra product to advance even more on the next slide, you can advance. Well, private label, we've already started the first product. They're going to be -- we're going to use the SA brand it's going to be geared to the end customer, especially the Chef brand that's geared to our food service public. It's a band as I already worked with before and is already geared to some products that should probably be expanded a bit. an icon with the first level price. And we've already advanced on the first 25. The other 175 million should be available by the second half or until the end of the year. And the objective is to expand margins. That's a clear objective, considering that we saw industry took on a low-cost and put this in, and we want to get part of this reminders. The objective is expansion of the margin, loyalty of our customers and creating a strong point of our commercial purchased power and expanding the mix of private label digital. This year also went through imported we expanded the amount of stores [indiscernible] iFood. We have over 100 stores and if you want to get into the and we're already looking at the different cash as well for fulfillment. Especially invoices and logistics and everything so that we can work on this new channel. And we're also waiting on the approval of the split of the peak, which is one of the important value levers in our company and we got a waiver for the pet project for the credit card terminals. But the other initiatives still rely on approval from the Central Bank. We have over 1.3 million active cards, and we think it's an important opportunity for complementary financial services and also exploring a private label item for consumers or also for businesses that may be find challenges to obtain credit. So these new initiatives and that we're assessing such as real stations, ASSAI has so 40 million customers, most 20 million. We also have the be stations and the electric power stations. So our cost of being on the free power market is maybe fast than like a residential cost. So in big stores with high parking areas as you advance, how we can also reinforce this would be able to sell power to customers even for cheaper than what they would have at their house. with the reinforcing price margins, et cetera. And so that these are initiatives where we keep the leverage levels and lot level CapEx, if you consider we can really consider the value-creating possibilities. And so I wanted to go over this. And Blair is also keeping up with our earnings and we've already announced that Rami will be dedicated to more personal projects, and we'll have Andersons taking on commercial logistics, just estates of working on this period as well. And I want to thank Feefo all of his efforts, dedication and contributions we had other opportunities to talk about this as well. Without your contributions, we'd never get to where we're at. And I want to wish you to express for your new personal projects, and then we'll pass this on to Santander and open up for Q&A. Good morning, everyone. Thank you, Benito, first of all. I just want to -- I don't mind getting the way you hear on the call, but I want to thank you for these 15 years of partnership at a site and thank our shareholders and the Board and management as a whole, my peers and the financial market as well. But I think I wanted to 2 special things. One to our suppliers, which will was leading the commercial area. We've got a lot of support from our suppliers, and I hope they continue to support these in the company and to the over 90,000 employees that during this period that I was [Audio Gap]

The legislation the inspections and legislation will change. So we cannot estimate too much, even if the rhythm is continued, this should probably increase a lot in terms of what was recurrent, as we mentioned. When we look at competitiveness, if we gained 0.3 in shares. So the evaluation that the company has made is that we have a market scenario with indebtedness of the consumers and deflation of commodities. So we will probably be able to sustain the margin, but worse maybe it could have altered and made a difference in sales. That's a scenario we are working with right now. The company has been very cautious, but this will not affect the deleveraging. Despite the deleveraging, we will have a scenario of a very tight money in the hands of consumers of low income and those who are at the other end do not notice it. So Brazil has many Brazil at the same time, and the reality today, if we look at the numbers. with the movement of the government of using hall and other things is because we are still highly pressured with the new factors that appear, I think that it's something that will not effect, the higher income. So we already have higher prices than consumers, investing more in margins to seek more sales and levels of competitiveness, the main share has been maintained in the first quarter in April. We see there is still a higher advance in share despite the fact that the market as a whole has been suffering. So since there are a few companies have opened public companies. But as I said, this is a temporary cycle. The cycles in commodity have always happened. -- high interest rates, low interest rates, and we are implementing new initiatives to sort of until this cycle passes in the converted stores. There's not a lot of difference. And this year, we will stop providing the numbers. But if you look at the first quarter where they were above the forecast, but what's interesting about the stores, especially from extra that many of the new projects even with the layout on the pharmacies and the gas stations. The more adherent stores are the central stores that we have that are not necessarily coming only from extra even with organic expansion stores which we put closer to the central regions to capture the higher income population. I hope I answered your question. You did answer. But just to draw attention to 1 more point to clarify, looking at the Note 14 about the commercial points. Was there anything in this quarter that was abnormal? This BRL 170 million that was reduced. Is that sustainable? Are you going to continue doing this? Just more color on working capital, if you can? Yes, sustainable it should continue to be done part of the commercial funds we received are recurrent given the negotiations there may be some variations over the quarter, but nothing that is outside of normal with the exception of the fourth quarter where there is higher seasonality.

Next question is from Rodrigo Gastim from BBA. [Operator Instructions]

I have 2 questions on my end. The first one, Belmiro is a curiosity on how you internally buffer the budget, how much this cycle of commodities that are more under pressure will last understanding the 12% that you mentioned for the first quarter, how do you see this in your accounts? And in case this lasts for a longer period of time, where there is a deflation of more commodities, what could be done in terms of profitability? Is there any space to tighten operations, how much efficiency can you still gain? And the second question is about the pricing project and the impact on the gross margins. This is something that you have been talking about for several quarters. if this was already captured and how much is still to come in terms of gross margin because of this project? Those are the 2 questions.

Well, I think both of these questions are related to each other. -- because there have been changes in our model of pricing. So we were at priced in store clusters and given the geography of stores that we have, there have been advances at the rate in which the projects are maturing -- at this moment, there are many components in the margin, there is a margin that has suffered impact at the rate in which there was deflation when the stock is higher and you need to sell things at a new price where there is a drop in margin. So despite that, what we expect is to continue to deliver the evolution in margin, be it through the system or because the commodity in itself -- and as part of the patient will affect the mix, it's not so marginal, but in this quarter, it's very marginal. But in the predictability, it is very complex because commodities are very difficult to estimate in terms of prices. So at this moment, what we have been looking at with more caution -- we have some strategic stocks being done in April with some projects where we had convictions of purpose, but we are not playing with stock of having more stock than we need more than is necessary in terms of capital, working capital because there are uncertainties in terms of the consumers. So while this uncertainty exists, for the low-income population, we should continue to be reflecting on this and working slowly. The market has been suffering with this and the international consumption as well. So estimating it is very difficult. We basically will adapt to it. So the company has always been resilient in this sense, so much that I invite anyone who would like to look at our presentation for international investment. Our gross profit has increased in the last 15 years. So even in inflationary cycles or deflationary cycles, we have been able to preserve margins. So in a more objective way. The consequences for the price of sales. So we are working to have low prices and good commercial negotiations and continue to be competitive and maintain the margins that the company needs. I hope I answered your question. Very clear, Belmiro. And just a quick question that some people asked and maybe it would be interesting to leave this very clear when asked about the inflation of food starting in the second quarter, especially in April, just to make it clear, meter that you already noticed or did not notice in your operations. Have you seen any changes or recovery of pricing it would be important to make this message very clear because that generated some questions. Thank you. No. In fact, -- this has altered prices in some categories of products that has been visible their products. There are products that are more affected because of the conflict that is link, we should see stronger impacts now in May and June. Since most of the operators in the sector and even us had stock but at the rate in which now there is stock that has suffered inflationary impact we will be correcting the price of sale. Obviously, we need to be careful to not give you a number. But of course, if there's a pressure of price, we will need to pass on the prices that we had perfect. So it's a dynamic that's still similar to what the first quarter was in April, but there's some optimism in relation to that for May and June. That's the reading you have today. So there's a nominal correction in the same way that we see a deflation of 1% in the commodities. There is a limit of what we can offset as well as an adverse movement, which obviously is not in our hands. This is in the market context because of everything that we mentioned because in terms of the increase of consumption all of this inflation may help correct the top line.

The next question is from Vinicius Strano from UBS. We will open your audio so that you can ask your question. Please go ahead.

Two questions on my end. The first is about the volume of PJ. So if you could comment on what you see in terms of your PJ clients. what your perception is on the financial health of these clients in the scenario of high interest rates. And if you think that in a scenario of recovery of inflation, if we can think about a refi and some movements of anticipation or formation of stock in the profile of clients here at the end of the line? And my second question is about the effects of the removal of products from the tax regime in Sao Paulo, if you see that this can generate the possibility of monetization that is additional for taxes. Looking at the ICMS angle, if you have 1.6 billion to recover in CMS alone, maybe this can generate some opportunities and thinking about new phases of tax exemptions. What can we think about in terms of impacts in ICM net revenue and margins towards the future?

Thank you, Vinicius. As you well mentioned, Sao Paulo has been removing a series of items in the tax burden, which will be happening over the year and new batches will follow we put to the variation of gross margins because this will affect the ceiling that Sao Paulo has in the correction of ICM V, once you leave the regime where you only had the reinstitution of the tax as a reductor of ICMV for credit and debit. So this will be affecting the net sales in relation to this competitiveness we do not expect any change because -- our numbers were already elevated. If you think about the substitution or the main sales with the effectively sell products. So that we would need to recover credit, which is extremely complex. It would have to be on for every SKU, but there weighted average. So in our point of view, this will alleviate us in the point of processes because you go into the credit and debit regime, which we operate with low price, the lower the price, the lower the margin no matter how that was already composed before, but the lower price, the less taxes you pay that has a neutral effect from the point of view of competitiveness, in my opinion. So seriously, what will change is the former negotiation with pricing and negotiating with suppliers, but the products will be going to the normal level. And the volume of PJs, what have we observed these clients, as I mentioned -- even those who accompanied the Nielsen report has a vision that it's a bit distorted. There is a bias in the samples because those who deliver data are the high the large industries for low income is only done afterwards. So the PJ clients are the people that are in the 9% and these clients, we have observed them as highly cautious. From the point of view of credit, it seems that their financial health has not been dropped in this sense because these clients are very resistant. They never had access to credit, so they are maintained, but they're being very cautious in the origin of the low income that comes and has been impacting cash and carries, accompanying deflation is at the origin of the consumer. So when they feel that their if there's any explosion in any category of product that is not perishable where they see more opportunities of gain clients will be more careful before they invest in stock. That's what we have observed this movement has been happening in the last 2 or 3 years with the PJs being very careful at the moment of absorbing more so part of this explains the margin movement, which we have been doing. So we do not see clients with elasticity to say that, oh, no, I'm going to drop prices and have huge volumes. No, this has not happened. I hope I answered your question.

The next question is from [indiscernible]. We will continue to the next question [indiscernible] from Bank of America.

Belmiro, I know it's difficult, but what do you think about same-store sales and operational leverage for the year as a whole? You have deflation, but there are also compensations your launch in the Mercado Livre seems a bit delayed. How should we think about the time line to reach 450 SKUs on a national level? And Belmiro also seems that you are very confident in the value proposals. Could you comment on the price differentiations that you are observing? And to confirm the initial proposal would be B2C, B2B or both?

Bob, I didn't understand the value proposal in relation to what you talked about B2B or B2C, both what is the value proposal in comparison to the electronic competition in the platforms.

Okay. Understood. I think there are 2 factors -- what we are confident on in the value proposal with the partnership with iFood is because of our capillarity in stores and assortment, which we can offer and the price level that we are able to provide so much that today, we are probably the main operators within this platform. and it's an observation of ours that there is still a lot of space to be able to advance for Mercado Livre since we closed the deal at the end of March, we even had announced that the tests would begin in April because there's also a time line of projects for both companies, that is the objective is to accelerate more, but within responsibility, especially on the part of integration. And I believe that given our size and our scale to add a series of products, we could -- as we showed in the initial numbers be a very strong competitor within the platform on items that we understand would be adherent. This is a discount that is done with for hands with us in Mercado Livre. And this should probably be strong in the second semester. And with regards to the -- as far as we see a scenario, which for consumption should still continue restricted, obviously, in a deflationary scenario, it could be that the that there is a turnover and that will affect the sales. But with deflation, we cannot do anything about it in the same way. The inflation would coincidentally be over the main products which are the ones that have more components of credit and also have more weight in the final price of the product and the composition of the packaging, looking at the same stores. We have observed the clients doing trade down. So every time we look at the level of indebtedness of the population, they are holding the market consumption. There are other sectors of retail that are not being affected, but then we have to understand the social classes in Brazil of movement. For higher incomes do not suffer impact even in our stores for higher income do that are directed to lower income. They are in a market scenario that is very difficult. We hope the scenario improves, and we are working on this at the moment to prepare with new incentives, new proposals of value, new channels and new products to be able to best be prepared.

The next question is from Andrew Ruben from Morgan Stanley.

I'm interested to understand more about the plans for private label. You mentioned the 200 SKUs for the year. Do you have any sense of where you could see that figure reaching over time -- and even over the medium term, your vision for what private label penetration could be within your store sales.

He can hear the translation. He also asked about the 200 SKUs and how we are doing in that sense. Okay. I think I was able to activate it now. Well, we still have the first 25 products as there are a series of negotiations with the industry, we will finish the quarter until the end of the year, we should continue with a evolutionary scale and every quarter brings you the new information. The entrance from the industry is very high. Our own label has always been a challenge in Brazil, but as we had highlighted before, in the polician region of Sao Paulo, we have 60% of penetration in homes. So there are still opportunities for our own brand. This is being discussed in the Board, but it's a very favorable moment to come in with an aggressive project for private label. We are also looking for products with lower prices. Obviously, there's a lot of and we need a lot more information because of competition issues in the market, but at the rate in which we can and every area will be giving more shedding more light on the subject.

The next question is from [indiscernible] from HSBC. We will activate your audio, so you can ask your question. Please go ahead.

My question is in line with the previous one on the private label -- and when we look at the more mature markets in the United States, for example, like Costco, the giant Costco, they have their own private label that is very strong in terms of vitamins and supplements. It is just like the Equate brand, just to know how the company that brought this release of way and creating if that is going to be offered connected to higher amount of protein consumption and because of the change of the consumer, you also expect to grow in this category with your own brands?

Thank you, [indiscernible]I think in terms of vitamins, when you look at the other protein supplements, no, there is no restriction from the point of view of doing this with own private label. There are medications and private labels, and we can work with the brands that are well-known but the rest would be to work with projects that could be extended. They are in a previous phase because we are creating more space in stores and in my vision, the pharmacy will also be attractive for this the coincidence with Costco is that they have a pharmacy as an important point of attraction and they are able to follow on even in these markets with the volume of sales. And medications within the food sector is huge. We are still working on this, but the first pharmacies will come out in the second semester, but it will be much faster since it doesn't depend on a license so for us to be able to advance once the changes -- the behavioral changes, especially with the higher classes and the search for more protein products has been quite notorious. We've seen these changes in the market. Assai is the largest seller of protein in Latin America, especially with some projects, which we've had in the last few years for the inclusion of services that are still under maturity. This was made in order to position us more strongly in the position in the category of protein. So this is strongly in our radar.

The next question is from [indiscernible] from Safra. [Operator Instructions]

I would like to ask 3 quick questions. If you could open on gross margins, how much the annual gains come from store maturity and how much comes from pricing projects. Anticipation of credit cards the level dropped a lot in terms of receivables ever in the year-over-year in relation to the last quarter. I would like to know if this is a recurrent volume that we should expect in the future. And then the last point is in relation to taxes over revenue. There was an increase in this quarter. I would like to understand exactly what the motive of this increase was and if we should consider a higher volume from now into the future.

Well, Tales, I'm going to talk about the margins of the taxes, and then [indiscernible] can talk about the anticipation of credit. So the taxes was a change. When you talked about the item leaves the tax substitution when it is in the SAT. The tax of ICMS is within the ICP. When it comes into the normal thematic the tax is deducted and that's why it comes in as net revenue. So the weight and the increase of taxes over sale is connected to the change of system, the substitution of taxes, especially in the state of Sao Paulo, there are other states also made this change, but it has not been so relevant. In terms of gross margin, we should not probably open. We've shown positive margins. but they are also negative sides. So for we will probably reach a number which, in our opinion, opens a strategy for the company and opens a lot of strategies to gain share in the company. And then the margin should also become interesting to competition because it wasn't expected. So the natural path of pressure is that you lose the top line and then you lose the margin, but that's not what happened. So our resilience is very strong in the sense within the sector within the food sector, but we cannot open the components of the margins on the taxes. The more products leave the substitution of tax more will the effect become visible if there are any questions on that, please speak with our international relations team because they will be more than available to give you more information on that and [indiscernible] talk about the anticipation of credit cards. Thank you, Tales for the question.

On the anticipation of credit cards, historically, we've always had this as an alternative to recompose short-term cash to accelerate some kind of cash flow to cover the needs of the company. But historically, these are avenues of cash reductions that are a bit more expensive than a structured sale as a debenture or other path. So given the tax situations. We had a substantial drop or decrease within the period compared over the last 12 months and even in the quarter as a whole, as a strategy -- what we see for the company is no activation in this front, but we should prioritize the lower cost debt they will have balance of the cards increasing.

Just a complement in terms of the debt -- we have a program of rebuying the debt, and this has been improving some taxes or some fees account the Board approved it -- and so we can anticipate credit cards after the purchase of the secondary. It's not necessary to have a volume of cash, and this has been well demonstrated.

The session of questions and answers is finalized now, we will pass the floor to the final considerations of the company.

I would like to thank everyone for the participation in building this material, the Board for the support. We had to bring these scenarios. We would like to be talking more about the consumer market in a better scenario. But is highly resilient. If you look at the delivery of margin independent of the scenarios that we have been going through. And the company once again is positioning itself planting seats, which when it's connected to indebtedness and the higher possibility of consumption for the low-income population, which are highly pressured at this moment that the company will be well positioned with new initiatives to capture these gains. I would like to thank everyone, and thank you for the participation. I'm sorry if I spoke too long in the beginning, I wasted more time on that, but we just like to make things very clear. We talk about Assai independent of the moment we are in, in our vision, we could say, but all things could be better. But given the scenario of consumption, I think the entire team in general is highly congratulated. Thank you so much to all.

The video conference on the call of results for the first quarter, Assai has been finalized the Department of Relations our investors is available to answer any further questions. Thank you so much to the participation, and have a great day.